“$1.9 billion in CARES Act tax benefits are being claimed by at least 37 oil companies, service firms, and contractors”

Bloomberg used the example of Diamond Offshore Drilling Inc. who manipulated the bailout: (emphasis by Wrongo)

“As it headed toward bankruptcy, Diamond Offshore Drilling Inc. took advantage of a little-noticed provision in the stimulus bill Congress passed in March to get a $9.7 million tax refund. Then, it asked a bankruptcy judgeto authorize the same amount as bonuses to nine executives.”

But, Diamond’s refund wasn’t all. Some went to their larger competitors. More from Bloomberg:

Hats off to all of our Senators, Congresscritters and the Trump administration! They all continue pursuing a pro-fossil fuel agenda, even as the economic disaster of the pandemic unfolds. Bernie Sanders tweeted:

“Good thing President Trump is looking out for the real victims of the coronavirus: fossil fuel executives,”

But, Bernie apparently voted for the bill, which passed the Senate in a unanimous vote. Hypocrisy much, Bernie?

These loopholes in the Act were deliberately written in so that corporations could feed at the trough along with small businesses, and we the people. Moreover, the initial bill was written in the House, although presumably in consultation with Trump and the Republicans. So, you can view this as either the cost of doing business for Democrats, or as just another day at the office listening to the lobbyists. Subsidy legislation has been a bipartisan objective.

Its always been this way. Here’s a cartoon from 1920 that could be drawn today:

Let’s remember that a big issue was the requirement for oversight, particularly after Trump said he wasn’t interested in having any. A compromise was struck so that an oversight commission could be empaneled to keep track of how the money was spent.

Today, it remains without a leader. Four of the five members of the Congressional Oversight Commission have been appointed, but Speaker Nancy Pelosi, (D-CA) and Senate Majority Leader Mitch McConnell, (R-KY) have not agreed on a chair.

While the current members of the panel can perform some oversight, without a leader, it can’t hire staff or set up office space. In addition, the four members have not met as a group since the economic rescue law was passed. The PBS NewsHour quotes John Coates, a professor of law and economics at Harvard Law School:

“If the commission is not functioning — which it is not — then there is no oversight on a huge part of the economic rescue law…”

We seem to be able to bail out the rich every few decades, and we always seem to do it on the backs of the poor. It will probably happen again in another 10 years or so. Between these bailouts, politicians and pundits appear on all of the news shows, and write very serious articles proclaiming the need to resist socialism and to preserve “the free market” for the sake of “wealth creation and innovation”.

Time to wake up America! This great con has been going on for all of Wrongo’s lifetime and by looking at the cartoon above, for a few lifetimes before. Yet voters seem to be oblivious to this insidious form of corruption each and every time they go to the polls.

To help America wake up, let’s listen to Drive by Truckers, and their tune “Armageddon’s Back in Town” from their 2020 album, “The Unraveling”

Sample Lyric:

There’ll be no healing
From the art of double-dealing
Armageddon’s back in town again

The WaPo reported that a Coronavirus-sparked oil war sent crude prices down on Sunday by 32.3%. That triggered a forced temporary halt of stock trading on Monday, when the S&P 500 index sank 7% shortly after the market’s opening.

This occurred on the 11thanniversary of the current bull market. But, as Greg McBride, chief financial analyst at Bankrate.com, wrote:

“The uncertain economic impact of coronavirus continues to grip markets, with stocks, commodities and interest rates all dropping sharply. Markets hate uncertainty and there is a ton of it currently in play.”

There is no question that there will be more angry Americans now that a health crisis coincides with a financial crisis. Who they focus their anger on remains to be seen. Trump took credit for each rise in the stock market, so will he take ownership now that it’s tanking?

He’s not a broadly popular president, and this will make him less popular, so fewer people will believe him when he tries to lay the blame on others.

The oil price plunge was triggered when Russia announced on Friday that it would no longer stay within the OPEC+ quotas after April 1st. Saudi Arabia then said it would slash prices for its customers in April. In addition, they hinted at increasing production from the current level of 9.7 million barrels per day to 10 million barrels per day.

This is the start of an oil price war between Saudi Arabia and Russia over market share. But the real target for both may just be the US shale oil sector. US banks and other investors have been fueling the shale oil sector’s growth with hundreds of billions of dollars of loans over the years. And the shale oil producers keep ramping up production, despite it being largely unprofitable. They continue to burn through cash.

By sending some of these shale-oil companies into bankruptcy, Saudi Arabia and Russia are hoping that new money will refuse to support the US shale oil sector. Then production in the US will decline and take some oversupply out of the oil market.

Their timing is impeccable. Oil demand is down due in part to the Coronavirus. Chinese manufacturers are producing less and airlines in particular have less need for jet fuel. If OPEC and Russia increase production, and assuming US production still increases while demand globally is in steep decline, then global markets will be awash in oil.

But no worries! We can count on the competent leadership in the White House. And if that doesn’t make you comfortable, you might ask yourself, “Is this 1929 all over again?”

Maybe not, but if it is, who will be our FDR? In the 1930s and 1940s, FDR spent money on America’s democratic infrastructure. That money gave jobs to people. He created a social safety net, and allowed industry to again flourish.

But in the past 30 years, all the money has gone to our industrial infrastructure and to the rich, through tax cuts and subsidies. The easy money party has helped to pump up both stock prices and asset prices, giving us an ever-growing income and wealth gap.

What happens to the health of the people and to the health of economy between now and November is going to be a huge political concern. There’s always a tension between the best health policy, and the best economic policy.

Trump wants economic policy to win out, but the primary beneficiary of that is industry and the rich.

We should remember that when leaders are seen to be incompetent and/or ARE truly incompetent, they try to divert the voters’ attention. What Trump attempts to do in order to divert our attention, is worthy of discussion.

As of today, the fuse is lit. It’s an election year, and we know that Trump won’t go away quietly.

Greenland shows its melting glaciers – September 14, 2019 photo by Steve Mueller. Mueller gives a personal testimony, describing similar flights over Greenland in the 1970s, 80s, and 90s when ice & snow covered most of it. Sadly, that’s no longer true today.

Wrongo rarely writes about climate change, because he’s had very little hope that the world will act to solve, or delay the reality in front of us.

Until now.

There is something very hopeful when young people around the globe are calling out those in power and calling out the rest of us who have exacerbated the warming problem through our commitment to economic growth at any price. That price includes income inequality and the ever-accelerating use of our planet’s resources to fuel that economic growth.

The emergence of young people as activists adds a different dimension to the argument. They are worried about what kind of world we’re leaving them. The movement is personified by the 16-year-old Swedish teenage activist Greta Thunberg. On Monday, she spoke to the UN Climate Change Summit, and did not mince words. She implored world leaders to act urgently:

“I shouldn’t be up here. I should be back in school on the other side of the ocean. Yet you all come to us for hope. How dare you. You have stolen my dreams and my childhood with your empty words.”

“Anger is an energy” said the Sex Pistols in 1972. And we’re seeing both anger and all of its kinetic energy on display by these kids. It’s reminiscent of teenagers in the 1960s and 1970’s in the US, first with the Civil Rights movement, and later, with less effect, in the Vietnam War protests.

Time will tell if this social movement ends up helping to create big policy change, or if it’s just another footnote, a bit like Occupy Wall Street. But, It’s given Wrongo some hope that it is still possible to battle against entrenched money interests, at least on the question of climate change.

When floating sea ice vanishes, it exposes deep blue waters, which absorb more solar energy than the white ice does. In turn, this speeds up melting: it’s a classic positive-feedback loop. The ice recedes to an annual minimum extent every September. The record low was set in 2012.

Some sceptics point to cold snaps in North America as evidence that concern about global warming is overblown. They should be told that such days are caused by chilly air escaping polar latitudes. Which in itself, may be another consequence of a warming Arctic.

A good analogy is the problem supertankers face if they try to make a U-turn. It takes a tremendous amount of energy and time to overcome the ship’s momentum, to slow the tanker from cruising speed to a point where a u-turn can begin.

For climate change, we must overcome our momentum, reversing how we create energy, how we manufacture our goods, how we travel, how we heat and cool our homes, and how we provision our foods.

The next challenge is if this can be done while continuing to expand the global economy, keeping in mind that the global population may be 50% larger by 2100.

Back in corporate life, Wrongo used to talk about things that could be fixed “If your life depended on it” and those that couldn’t be fixed even if your life did depend on it.

If the problem can be fixed if your life depended on it, you fix it or die, no excuses. This is where we are today. Maybe it’s not our lives that depend on it, it’s those of our grandchildren. They are counting on us to rise up now, in a global movement to make change.

Wake up America! The kids couldn’t be clearer: They do not want pats on the head, where we tell them how “inspiring” they are.

For Boomers and Millennials, the climate problems posed in the second half of the 21st century can still seem largely hypothetical. But for those born after 2000 like Greta Thunberg, and 2.6 billion others, it’s more like half their lives. This gives a huge moral weight to their demands.

But it will take more than political activism. The kids want our leadership, our votes, and most importantly, our action to confront this crisis.

#1: Wrongo watched the video of Trump walking across the Korean DMZ. While most foreign policy professionals will have a cranky reaction to the event, it represents progress. Both sides had stopped negotiations and in fact, were not even talking, after Trump walked out of the Hanoi meeting.

Whether it is a breakthrough that leads to a deal remains to be seen. OTOH, Trump took his daughter Ivanka and Tucker Carlson to the DMZ, while sending John Bolton (who he called “Mike”), and Mike Pompeo on to other tasks. Anything that drives the GOP neocons crazy can’t be all bad.

The incoherence of Trump’s global strategy shows itself in extending himself to North Korea, a country that has nuclear weapons, and the means to deliver them. The US has no agreement with NorKo to contain its weapons of mass destruction. We don’t even have a peace agreement after the War that ended in 1953, but we’re talking.

Contrast that with Trump’s walking away from the signed Iranian nuclear deal, which was negotiated to prevent an exact North Korea-type situation from happening. Inexplicable.

“Los Angeles Power and Water officials have struck a deal on the largest and cheapest solar + battery-storage project in the world, at prices that leave fossil fuels in the dust and may relegate nuclear power to the dustbin.”

Cheaper than fossil fuels, the new plant will be built north of LA, in Kern County. LA officials said that it will be the largest and lowest-cost solar and high-capacity battery storage project in the US. When up and running, it will operate at half the estimated cost of power from a new natural gas plant. The plant is expected to deliver its first megawatt by April 2023.

#3: Reuters reports that Trump’s “deal” with China may not be a deal at all. In their article, China warns of long road ahead for deal with US after ice-breaking talks, Reuters quotes the official China Daily, an English-language daily often used by Beijing to put its message out to the rest of the world. It warned there was no guarantee there would ever be a deal: (emphasis by Wrongo)

“Agreement on 90 percent of the issues has proved not to be enough, and with the remaining 10 percent where their fundamental differences reside, it is not going to be easy to reach a 100-percent consensus, since at this point, they remain widely apart even on the conceptual level.”

“They were told to arrive early if they wanted to see a doctor, so Lisa and Stevie Crider left their apartment in rural Tennessee almost 24 hours before the temporary medical clinic was scheduled to open. They packed a plastic bag with what had become their daily essentials after 21 years of marriage: An ice pack for his recurring chest pain. Tylenol for her swollen feet. Peroxide for the abscess in his mouth. Gatorade for her low blood sugar and chronic dehydration.”

A view from the volunteers:

“…a clinic volunteer….patrolled the parking lot late at night and handed out numbers to signify each patient’s place in the line. No. 48 went to a woman having panic attacks from adjacent Meigs County, where the last remaining mental-health provider had just moved away to Nashville. No. 207 went to a man with unmanaged heart disease from Polk County, where the only hospital had gone bankrupt and closed in 2017.”

With Republicans doing everything they can to break the Affordable Care Act, and then refusing to fix it, this is what their actions have caused. Rural hospitals are closing, people in rural counties have no health care. And the GOP tells them to blame Democrats. The reality is that Republicans in these states have cut funding for the programs that kept red state rural clinics and hospitals operating.

The water was trapped in mile-deep ice 15,000 to 20,000 years ago. When the ice melted, sediments formed huge river deltas on top of the shelf, and fresh water got trapped there. It would have to be desalinated for most uses, but the cost would be much less than processing seawater.

It’s tough to wake up on a Friday morning and find out that during the previous night, America almost started a war. On Thursday night, Trump allegedly pulled back from a military strike he had earlier authorized against Iran.

The New York Times wrote: “Trump Approves Strikes on Iran, but Then Abruptly Pulls Back”. The NYT says that Trump’s hawks, Bolton, Pompeo, and CIA Director Gina Haspel, had argued for the strike, while the Pentagon was said to have been against it. The NYT report includes this paragraph: (emphasis by Wrongo)

“Asked about the plans for a strike and the decision to hold back, the White House declined to comment, as did Pentagon officials. No government officials asked The New York Times to withhold the article.”

It’s curious. If Trump was serious about attacking Iran, what purpose was served by the WH giving this story to the NYT? Not everyone bought the claim that a planned attack was called back. Jeffrey Lewis, a scholar on international conflicts, tweeted:

I don’t buy this. Trump’s team is trying to have it both ways — acting restrained but talking tough. This is pretty much what Nixon did in 1969, too. Why not just admit that sometimes restraint is smart?

On May 6th 1969, the Times carried a story that Nixon decided not to escalate when the NoKo’s shot down a US Navy plane. So, this current storyline of “a strike was ordered, but Trump held back and saved the day” might also have been coordinated by the WH and the NYT.

If the threat of another Middle East war wasn’t bad enough, a new IMF study shows that US $5.2 trillion was spent globally on fossil fuel subsidies in 2017. The latest available country breakdown is for 2015. In that year, the US was the third-largest subsidizer of the fossil fuel industry, providing $649 billion in subsidies. China and Russia ranked first and second, respectively.

You should be outraged that the $649 billion we spent in 2015 is more than 10 times the 2015 federal spending for education. America has to change its priorities. The true costs to America of using fossil fuels has to include these subsidies.

These two stories about fossil fuels show our government’s fealty to the oil industry.

The average person didn’t notice that on the day the American drone was shot down in the Straits of Hormuz, the price of oil jumped 10%. Trump surely was told this, and the risk of higher oil prices caused by his risky foreign policy may have reduced his desire to strike at Iran.

For whatever reason, we’ve finally seen a prudent move by Trump. It’s a face saving gesture: he appears both tough and reasonable simultaneously. Also, it is encouraging that he used the concept of proportionality, saying that the planned strike would have been too harsh a retaliation for losing one drone.

We can expect his neo-con advisors and the FOX fringe to try to undercut his decision. Maybe then he’ll understand it’s time to clean house.

So, on this Saturday, it may be difficult to get soothed, but let’s try our best. Wrongo and Ms. Right are on Cape Cod with daughter Kelly, where rain is dominating the weather. In honor of being here, today we’ll brew up a large cup of Wellfleet’s Beanstock Coffee Roasters’s old reliable Wellfleet Blend ($11.99/12oz.).

Now, settle back and listen to “The Hebrides”, Op. 26 “Fingal’s Cave” by Felix Mendelssohn. It is played by the San Francisco Conservatory of Music Orchestra, conducted by Scott Sandmeier.

Mendelssohn actually visited the west coast of Scotland in 1829. It was part of Mendelssohn’s three-year Grand Tour, a common excursion taken by young men of wealthy families as a part of gaining cultural literacy. Here is “The Hebrides”:

More than 1,000 young people and allies flooded the Capitol Hill hallways and offices of Democratic representatives to demand that elected officials listen to their youngest constituents—as well as some of the world’s top scientists—and back the bold proposal to shift the US to a zero-carbon energy system by 2050 in order to save the planet from an irreversible climate catastrophe.

The protesters were mostly members of the youth-led Sunrise Movement, 800 of whom had attended a training on lobbying members of Congress and their staffers the previous evening. They carried signs reading, “Do Your Job,” “Back the Deal,” and “No More Excuses“. Here is a picture of them in the halls of Congress:

Before you get all crazy about the (apparently) professionally-made signs, here’s a web site where you can easily make them. More from Common Dreams:

Many also wore T-shirts emblazoned with the following message: “We have a right to good jobs and a livable future,” two key components of the Green New Deal, which would create 10 million jobs in the first decade by putting Americans to work building a green energy infrastructure…

At least 143 of the demonstrators were arrested as they lobbied in 50 congressional offices. But, they had an impact. The number of Democratic lawmakers now supporting a Select Committee on a Green New Dealhas now reached 31, twelve of whom signed on this week. How it came together reveals how the Congressional Progressive Caucus (CPC), will use its growing membership.

The Caucus agreed with incumbent members who were willing to have a select committee so long as actual lawmaking authority remained in existing committees.

This wasn’t all due just to the kids. Rep.-elect Alexandria Ocasio-Cortez (D-NY) has spent the past few weeks wrangling support for the Green New Deal as well. The outcome was the result of a collaboration between the CPC leaders, Ocasio-Cortez, and the Sunrise Movement.

Wrongo doesn’t know if a Green New Deal is a good idea or not, but much of the message will resonate with voters. Who will be against “good jobs and a livable future”?

And Alexandria Ocasio-Cortez is showing that she has really good political instincts.

We should be happy that these kids are speaking from their hearts. They are practicing for when they will need the strength to fight the hard political battles of their generation. But, why aren’t we seeing a million parents fighting alongside their kids?

We also should remember how undervalued kids are in America: We under fund their schools. We are providing only low-wage service economy jobs for most of them when they grow up. We hardly care whether they are covered under a health insurance plan. We take them from their parents at the border.

No wonder they are learning to act, since we, their guardians, seem unwilling to act for them.

When the President and the incoming Speaker of the House get into a televised shouting match over whether we have enough money to fund Trump’s wall, you know that things have to change in America. They’re fighting over use of a limited resource, the US government’s funding.

We now have within our means the ability to feed, clothe, shelter, and educate everyone. But, as a country, we are unwilling to do so, because we buy into neoliberal economic theory. Never in history have we had the ability to make our species as secure as we do now, but we choose instead to make as many as insecure as possible.

Until about 1980, economic growth created a level of prosperity that earlier generations of Americans could only dream about. But, economic growth no longer makes people more economically secure. We’ve become prisoners in a system that promotes permanent growth, where wages stagnate, schools decay, and Goldman Sachs sits inside our government.

The question we should be asking is: How can our politics provide an answer to our people’s need for economic security? We know that neoliberalism has reduced many of our people to states of economic insecurity. We know that our economic and social order must change, and profoundly, or face an eventual revolution. This isn’t an option, it’s a certainty.

That means that only state funding will create the (peaceful) change we need.

…To put this another way, what may be the biggest programme of change ever known in human history is required in very short order. We need new energy systems; transformation of our housing stock; new transport infrastructure; radically different approaches to food that might even require rationing if we cannot create change any other way; different ways of working and new ways of using leisure time.

Murphy goes on to say:

But this must be done in a way that increases certainty. Jobs must be created on the ground…And I mean, in every constituency….but the transport and other infrastructure must be provided in that case and that does not simply mean more roads. The social safety net must be recreated. That means a job guarantee. It also means a universal basic income. And business must be transformed. Since that process will be incredibly expensive this requires capital and if that means state investment and co-ownership, so be it.

Murphy says that if this was wartime, our government would find the money to fund radical change. He says that we can no longer just extract higher taxes from the rich to solve our funding requirements, we need to create a vision, a plan and funding to achieve the change required.

One way to fund a portion of these requirements may be to restrict funding for the military, to eliminate tax breaks and subsidies for corporations. More from Murphy:

The time for pussy-footing is over. We know what we need to do. We know the scale of the issue. We know the reasons for acting….and we know we can pay for it. This is not left or right as we know it. And any party not addressing it is part of the problem and not the solution.

He’s suggesting deficit financing for societal gain. What are the chances that revolutionary change can happen? Almost zero today. Left to our political class, we’re just going to keep on doing what we’re currently doing, that is, until we can’t.

But, in the Middle Ages, the exact same thing could have been said about feudalism. That institution was deeply entrenched, it was “how things are, and were meant to be.” It was inconceivable that something like democratic government could ever succeed feudalism, yet it did.

Today, our revolutionary task is to allow democracy to express its full potential to reshape and revitalize our social and economic life.

We must begin by setting priorities, taking resources from areas that drain the economy. Then we need to devote those resources to things that will make for a healthier, more secure economy.

One example is to adjust the priority that military defense spending has in our economy. Let’s stop being the world’s policeman, nobody wants us to do it. Then, use the excess resources to build infrastructure, and renewable energy systems.

Everything else we need then will become easier to build.

It’s a matter of deciding what our priorities are, and voting for those who agree with that vision.

General Motors announced yesterday that it will halt production at five North American facilities and cut 14,700 jobs as it deals with slowing sedan sales and the impact of Donald Trump’s tariffs.

The cuts will also hit 15% of GM’s 54,000 white-collar workforce, about 8,100 people. And some 18,000 GM workers have already been asked to accept voluntary buy-outs. By next year, it will no longer make the Buick LaCrosse, the Chevrolet Impala, or the Cadillac CT6 sedan. It’s also killing the Chevy Volt plug-in hybrid. GM’s CEO Mary Barra:

We recognize the need to stay in front of changing market conditions and customer preferences…

“Changing market conditions” means that GM’s sales are down despite offering enormous cash incentives to potential buyers. GM’s new-vehicle deliveries in the US plunged 11% in the third quarter, and are down 1.2% for the year. In Canada, GM’s sales have dropped 1.6% so far this year.

GM’s goal in restructuring is to save $6 billion in cash flow a year by year-end 2020. But saving all this money will cost a lot: GM estimates it at $3.0 billion to $3.8 billion, including asset write-downs, pension charges, and up to $2.0 billion in employee-related and other cash-based expenses.

GM will have to borrow this money. They said they expect to fund the restructuring costs through a new credit facility. The money has to be borrowed because GM blew through $13.9 billion in cash on share buybacks over the past four years:

Despite spending $14 billion on share buybacks, the price of GM’s shares fell 10% over the same period.

You’d think that GM, a company that went bankrupt not too long ago, would be conservative in how it uses its cash. Nope, they wasted their cash on stock buybacks, and now they have to take out loans in order to reposition the company in its market.

Failing to anticipate where their market is going isn’t a new GM story. It had a 46% share of the car market in 1961, and now has a 17.6% share. They emerged from bankruptcy in 2009, only to be laying off workers and shutting plants in 2018.

Some history: Through the Troubled Asset Relief Program, the US Treasury invested $49.5 billion in GM in 2008 and recovered $39 billion when it sold its shares on December 9, 2013. We lost $10.3 billion. The Treasury invested another $17.2 billion into GM’s former financing arm, GMAC (now Ally). The shares in Ally were sold on December 18, 2014 for $19.6 billion netting $2.4 billion.

How were they enriched? Share buybacks boost stock prices. Usually the salary and bonus plans for top executives in public companies are keyed to share price, so the incentive to prop up the share price includes a personal reward. The Chairman and Board set the compensation plans for the CEO and C-suite. The composition of Boards is strongly influenced by the major shareholders, including the large stock funds, who want share price gains, along with a few buddies of the CEO.

We’ve just witnessed a decade of stock buybacks by large firms. They are doing that as opposed to investing in R&D, plant efficiency or market expansion. But companies can only go so far with financial engineering before they actually have to improve their businesses, and now GM has been burned by share buybacks.

This is more corporate greed that leads to the little guy facing real suffering when jobs are lost.

GM is a shot across the bow. The auto industry will follow with additional capacity reduction. Volkswagen has already warned that the shift to Electric Vehicles (EV’s) will drastically cut employment at its plants that manufacture internal combustion (IC) components. EV vehicle production is far less costly than IC vehicle production, so this will be a real and ongoing issue.

OTOH, car manufacturers all have an EV option, but people are still buying Toyota’s, Honda’s and Mazda’s, even though only a few are EV’s.

This new GM “plan” seems more like a smoke screen for being caught AGAIN behind a market that is moving away from them.

America: A sucker for saving GM in 2008.

And possibly, a sucker-in-waiting when the latest, greatest plan to make GM great again only works out for GM’s executives.

Mt Baker, WA – 2018 photo by np2fast. The two smaller peaks on the right are Colfax and Lincoln.

We are late to the story, but Bloomberg had a report in April, 2017 that electric power consumption in the US has been stalled for the last 10 years. Since the dawn of the electric light bulb, electricity demand grew in a direct relationship to the growth in GDP, but that relationship no longer holds. Here is a chart showing the divergence:

The white line is US GDP, indexed to 1997. GDP in 2016 was 151% of what it was in 1997, while the blue line, representing US electricity sales, is only at 118% of 1997.

Why? It is a combination of greater energy efficiency, offshoring of heavy industry, and both commercial customers and homeowners generating their own power. Demand for power from utilities is flat, and most forecasts expect it to remain that way.

Flat demand for electricity has big implications for the utility industry. They need to forecast demand for electricity about 20 years ahead, because they invest in large and capital-intensive infrastructure like power plants and transmission lines, costing billions of dollars so they can offer Business Utilities as well as household utilities. The utility wants to be sure that facilities they invest in will produce profits for many years to come. This is why it is important that the utility industry adapts in order to stay competitive by offering cheaper Energy Plans for customers.

But, investor-owned utilities (IOUs), which provide electricity for more than half of Americans, need to make money for their investors. They can’t make money selling electricity; monopoly regulations forbid that. Instead, they make money by earning a rate of return on investments in electric power plants and infrastructure. And with stagnant demand, there’s no value in new investment. And a drop in investment means a drop in profit. So, the IOUs are treading water as their revenues decline.

We are in a new normal. There is pressure from falling power prices, due largely to increased usage of natural gas and renewables to produce power. Wholesale power prices are down 70% percent from 2007, but little of those cost savings have been passed on to consumers.

For both economic and environmental reasons, it is good that US power demand has decoupled from GDP growth. As long as we’re getting the energy services we need, we want overall demand to decline. It saves money, reduces pollution, and avoids the need for expensive infrastructure.

More from Roberts:

Only when the utility model fundamentally changes — when utilities begin to see themselves primarily as architects and managers of high-efficiency, low-emissions, multidirectional electricity systems rather than just investors in infrastructure growth — can utilities turn in earnest to the kind of planning they need to be doing.

The electricity sector comprised of many providers such as Amigo Energy and others, understands where things are headed: Coal is dying out. Renewables are coming on strong. Distributed energy and sophisticated grid controls are providing increased efficiency. Natural gas may or may not be a long-term answer. Roberts shows how the Trump administration is out of step:

Trump’s love of coal, steel, pollution, and other such manly 19th century pursuits is an anachronism and a curio, but it is having little influence on the thinking and plans of electricity-sector professionals.

So, we have a strategic US industry in transition. They are now stiffing their customers, who have nowhere to go. They are not helped by an administration that is focused on an ideological response guaranteed to make the electric power industry’s efforts to find a better economic model much, much harder to achieve.

Naiman Nuur (Eight Lakes) National Park, Mongolia. The lakes are just 22 miles from the Orkhon waterfalls, but are accessible only by hiking, or by horse. You can get to it with 4 wheel drive vehicles, but it is 80+ miles one way, 160 if there are heavy rains. You are probably never coming here.

Rick Perry heads Trump’s Department of Energy, (DoE). With the Russians, nuclear war with North Korea, ditching the Iran deal, and hurricanes, we have ignored Perry. But Perry hasn’t ignored the coal industry Trump hired him to protect. The DoE has asked the Federal Energy Regulatory Commission (FERC) to begin the rule-making process to subsidize coal and nuclear plant operator’s costs and profits. From Vox:

Perry wants utilities to pay coal and nuclear power plants for all their costs and all the power they produce, whether those plants are needed or not.

The loss of coal plants had not diminished grid reliability; in fact, the grid is more reliable than ever. Reliability can be improved further through smart planning and a portfolio of flexible resources.

Then the DoE said to FERC: Address a crisis we determined doesn’t exist. They are asking FERC to adopt a rule forcing utilities in competitive energy markets to pay the full cost of plants that have 90 days’ worth of fuel on-site. Perry’s argument is that the levels of renewable energy produced from wind and solar is variable. And since backup is needed for days with calm winds or cloudy skies, we need to preserve the aging coal and nuclear plants to protect the power grid from dips in availability, because they alone among electric power sources, have 90-days of fuel on hand.

Perry’s contention is that coal and nuclear stored fuel is necessary for grid reliability, and, that these plants are unfairly being driven out of business by subsidies to renewable energy. This is patently false. It is cheap natural gas that is driving coal out of business.

Having fuel on-site does little for grid resilience. No one expects energy outages if coal and nuclear plants continue closing. But, let’s have more corporate welfare for the least useful part of the energy industry!

Perry’s alleged problem isn’t real, and his solution, subsidizing coal and nuclear plants, is a form of theft. A transfer from the most deserving, clean renewable and safe plants, to the least deserving, most polluting and dangerous coal and nuclear plants.

And people will be taxed through artificially higher electricity rates to subsidize coal and nuclear plants. More from Vox:

It’s hard to overstate how radical this proposal is. It is wildly contradictory to both the spirit and practice of competitive energy markets. It amounts to selective re-regulation, but only for particular power sources, which wouldn’t have to compete, they’d just have to have piles of fuel.

So does FERC have to do what DoE asks? No, but consider this: FERC has three commissioners (a quorum), two of which, including the chair, are Trump appointees. The chair is Neil Chatterjee, who was a staffer for Sen. Mitch McConnell, the Senate’s champion of coal. Chatterjee recently said:

I believe baseload power should be recognized as an essential part of the fuel mix. … I believe that generation, including our existing coal and nuclear fleet, needs to be properly compensated to recognize the value they provide to the system.

So, this market-wrecking plan to Make Coal Great Again is likely to happen.

This is an old-school Ayn Rand-style looter giveaway from a bunch of self-described free-market “conservatives” trying to rescue a dinosaur industry that is choking the world.

Just another issue that raises our anxiety level. It’s Saturday, and we need to dial it back, relax and stop thinking about how these Trump termites are quietly undermining everything. Grab a hot, steaming cup of Mystic Monk Paradiso Blend coffee ($15.99/lb.), find a quiet corner, put on the Bluetooth headphones and listen to Telemann’s “Concerto in D major for Violin, Cello, Trumpet and Strings”, TWV 53:D5. Here performed by the Bremer Barockorchester, recorded in a November, 2015 live performance at the Unser Lieben Frauen Church, Bremen, Germany:

Who Inspires Wrongo

Who is the Wrongologist?

The Wrongologist is a Managing Director of the Ledgewater Group, owner of the Wrongologist Blog. Previously for 11 years, he was a division president for a $14+ billion S&P 500 company, managing 1000 employees in multiple locations. Earlier, he was managing director for an investment banking firm, specializing in technology companies. He spent 14 years as a VP in the Asia Banking Group for a top 3 US bank. He served as an officer in the US Army during the Vietnam era, leading a nuclear missile unit. The Wrongologist enjoys road biking and showing dogs in AKC events. He holds a degree in Foreign Service from Georgetown University.

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Quotes We Like

“You know, that might be the answer – to act boastfully about something we ought to be ashamed of. That’s a trick that never seems to fail.” – Joseph Heller

About Background Photo

The photo is of Detroit's Mark Twain Library, It was closed in 1996 for renovations and never reopened.
Photo by Brandon Davis